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Questionable criticism of a government contractor—and unfounded calls for severe punishment
BlogMeaningful Discussions

Last week, several press outlets, a well-regarded legal blog (albeit one that does not generally focus on Government contracts law/policy), and at least one politician criticized the IRS for the award of a relatively small IT services contract to a company called CGI Federal. CGI was the contractor at the center of the problematic rollout of the healthcare.gov website. Although there were clearly substantial problems with the website development and rollout, some of the criticism of CGI—and the implicit calls for substantial punishment of that contractor—demonstrate a lack of fair consideration of publicly available reports about the sources of the problems with the website and misunderstandings of aspects of procurement law and policy.

(Note: Our practice at Mayer Brown has not represented CGI or any of the companies with respect to the Obama administration’s October 2013 rollout of healthcare.gov, and we have not performed our own independent analysis of what went wrong with the website.)

It was reported last week that, back in August 2014, the IRS awarded CGI a $4.5 million IT contract related to a tax program associated with Obamacare. Cue the outrage, as CGI was the company at the center of the mess that was the Obamacare website rollout. The IRS IT award was discussed in a blog post on the generally excellent Res Ipsa Loquitor website. The writer complained that the “company that botched [the] Obamacare rollout” was awarded the IT contract despite its “shoddy work” and without regard to purported improprieties purportedly resulting from “CGI Federal’s connections to fundraising for the Obama campaign and personal connection to the First Lady.”

As noted above, no one disputes that the Government and contractors experienced substantial, embarrassing difficulties with the development and rollout of the healthcare.gov website. But responsible journalists and bloggers should research the government contracts issues—and consider context more carefully— before calling for harsh punishments of contractors that are assumed to be primarily at fault.

Both the HHS IG and GAO conducted detailed investigations into what happened with the healthcare.gov website development and rollout. (The Congressional Research Service also published a helpful “frequently asked questions” paper addressing these issues.) The independent personnel from both the Executive and Legislative branches published extensive reports and placed substantial blame for the failures on the agency’s (CMS) contracting personnel. For instance, GAO explained that the agency had “made a series of planning decisions and trade-offs that were aimed at saving time, but which carried significant risks.” Managing those risks would have required “optimum use of acquisition planning and oversight” by Government personnel to properly “define requirements, develop solutions, and test them before launching Healthcare.gov and its supporting systems.” But none of that happened; instead, “the efforts by CMS were plagued by undefined requirements, the absence a required acquisition strategy, confusion in contract administration responsibilities, and ineffective use of oversight tools.”

True, according to GAO, “more than 100 defects” with CGI’s technical and code quality “were identified.” But the company explained that its code problems “reflected the instability of the [Government] requirements at that time,” and “once requirements [became] more stable, after October 2013,” many of the performance issues were resolved. Notably, although the agency and CGI went their separate ways following the public firestorm, CGI wasn’t terminated for default or convenience by the Agency; instead, CMS simply chose not to exercise an option and extend CGI’s contract. It is also worth noting that contractors often experience the sort of agency-requirements-creep described by GAO, and changing demands from the customer (along with poor agency administration of performance) can make compliance difficult, if not impossible, for contractors.

I don’t assume CGI’s performance was flawless—and can’t find anything from the company asserting as much. But the implication of the media/blog frenzy that a company at the center of a difficult, highly-politicized contracting situation should effectively be debarred is unsupported by procurement law and policy, e.g., the applicable suspension and debarment regulations. According to its website, CGI has a relatively long history of delivering solutions to numerous government and commercial customers; involvement with one government project that went sideways is not a sufficient reason for a company to be effectively debarred—particularly when independent Government offices have analyzed the facts and determined that the agency bears much of the fault.